Zonia Property: Geology

GEOLOGICAL SETTING AND MINERALIZATION

Zonia Main pit final floor with recent bulk sample trenching. View is looking northwesterly. Sample trench is approximately 2 to 3 foot deep. Late Tertiary age post mineral gravels and basalt cap the mineralized hill at upper right.

The Zonia property is located in the southern part of the Basin and Range province of the North American Cordillera immediately south of the Colorado Plateau. The section of the Basin and Range province in Arizona and New Mexico hosts a large number of base metal mines and occurrences. The Zonia deposit is contained with the steeply dipping Precambrian Yavapai Series, which consists of metamorphosed volcanic and tuffaceous sedimentary rocks. The Precambrian units have been intruded by the quartz porphyry bodies which range in age from Mesozoic to Cenozoic. Portions of the area are covered by younger basalts, fanglomerates and alluvial material.

Rocks at the Zonia Property consist of Precambrian rhyolitic pyroclastic rocks with intercalated andesitic rocks, all generally altered to sericite schists. They are intruded by monzogranite to granodiorite and by diabase dikes.

The quartz-sericite schists host the Zonia mineralization, which is of the porphyry copper type. Chrysocolla, malachite, azurite, melaconite and cuprite are the most common copper minerals. Quartz and jasper commonly accompany the ore minerals; oxides are ubiquitous in the mineralized zones. Oxidation has been pervasive and deep.

The Zonia copper deposit has a northeasterly strike length of about 7,000 ft. and horizontal width varies from 200 ft. to 1,500 ft. It consists of one or more zones that dip at various angles to the northwest. The zones are generally in the order of 200 ft. wide and commonly occur in subparallel groups of two or more. Most of the deposit has been drilled to depths of 400 ft. or less.

EXPLORATION, DRILLING, SAMPLING, ASSAYING AND DATA VERIFICATION

Diamond drill core from typical mineralized Yavapai Schist at the Zonia Mine. Blue-green and black oxides of copper are apparent as abundant fracture coatings and minor disseminated grains.

No exploration has been carried out on the Zonia property by SGV.

Drilling has been carried out on the property in the past by a number of companies. The largest amount of drilling was done by McAlester (85,000 ft. rotary) and much of the balance was by Equatorial (18,243 ft. reverse circulation). In 1994,

Mine Reserve Associates, Inc. (MRA) compiled the drilling and sampling data from the early drilling and sampling programs into a digital database which was added to by Equatorial in 2001.

This drill hole database was made available to Scott Wilson RPA and was relied on for the mineral resource estimate prepared in this report. None of the original data and information from the past drilling and sampling programs was available to Scott Wilson RPA except for six logs and a set of assay certificates from the Equatorial drilling program. Scott Wilson RPA checked 268 assays on the certificates against the drillhole database obtained from Mintec and no errors were found.

The only information available on previous sample preparation and assaying programs is in a report by Equatorial on the drilling carried out from 2000 to 2001. The assaying was done by ACTLABS-SKYLINE of Tucson, Arizona.

Rejects from the 2000-2001 Equatorial drilling program are stored on pallets in a locked building at the Zonia site. Scott Wilson RPA selected 11 reject samples for assay at SGS Laboratories in Don Mills, Ontario for total copper and acid soluble copper. The total copper assays are in good agreement and, although only eleven samples were checked, the check sampling provides a degree of confidence in the Equatorial assay results. Acid soluble copper to total copper assay ratios vary from 40% to 88% and average 72%. This confirms that much of the copper is potentially soluble by heap leaching.